Some of you are thinking about diversifying your investments and see real estate as a viable option to accomplish this. It can be a valuable investment to consider for anyone. Some of you may not like the idea of real estate as an investment because of the idea of dealing with tenants and the potential damage that any tenant could cause. I am here to tell you that this should not prevent you from investing in real estate. Hiring a property manager can help free up your time and protect your investment.
What a Property Management Firm Offers You
Those of you who are personally responsible for your personal finances may have never considered hiring a property manager. After all, you have been able to responsibly manage your personal finances, why would you choose to hire someone else to manage one of your investments. Wouldn’t that just take away from your potential earnings? While it is true that you can’t find a property manager for free, it doesn’t mean that the small fee (typically 6-12% of the rent) is not worth the benefits that they offer. In fact, there are so many benefits to hiring a property manager, it may make it hard to own real estate and not have one. Here are just some of the benefits:
Convenience: This may not be a surprise, but having someone handle all the emergencies as well as collecting rent from tenants can save you precious time, that would otherwise consume your life. It is important to remember that emergencies don’t just happen on the weekend. Most often, emergency plumbing or broken appliances can and will happen during the night or when you are on vacation. Paying for someone to do this unexpectedly can cost you just as much as having someone take care of this on a regular basis.
Security: If you find a property manager who knows what he/she is doing, it provides you with extra security. The good managers will perform background checks on all potential tenants. This is extremely important because just one bad renter can ruin your experience with real estate. Don’t let something that can be avoided keep you from earning money from a secure investment. Another aspect of security that it offers you is that they will fight to collect rent if it isn’t paid. Instead of you having to personally fight for what is rightfully yours, a property management firm has the resources and experience to obtain this.
Great Relationship/More Secure Investments: While building a strong relationship with your property management firm may not be your first priority when starting out, it should be included on the list. After you develop a great relationship with them, it is very possible that they will hear about other properties on the market. If you are providing them with quality business, it is possible that they will present you with more great properties to own. The people working for these firms may not be interested or financially able to take on certain properties, but don’t let this keep you from considering these options.
Is a Property Manager Right for You?
Hiring a professional to take care of the day-to-day details may not fit everyone’s situation. Every situation is different and requires careful consideration. Without going into too many details, here are some situations that may help you decide.
When to Hire
- Investing in a Different Market:If you are interested in investing in a different market than where you are familiar with, hiring a property manager only makes sense. It provides you with someone to keep a close eye on the property without you having to travel to this place just to check in on the renters. It also gives you the expertise of someone who is probably more familiar with the market then yours. This can be a great resource for calculating the appropriate price for rent, etc.
- Already Working Full-Time: If you are already working full-time and life is busy already, it may be a great way to venture into real estate without it having to take up all your time.
When NOT to Hire
- Living in/Renting a Duplex: If you are just starting out in real estate investments by purchasing a duplex that you will live in while renting out the other side, it may not be worth the fee. You can easily keep a close eye on the property without too much hassle. This same rule can apply if you have multiple properties in the same area.
- Lots of Free Time: If you are retired or have lots of free time, you may be willing to put in the extra time to take care of a house in order to save a few bucks.
Is it worth it to you? What’s your situation?
*featured image provided by: turkeychik